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Friday, February 28, 2014

The study of socialism is a challenging subject. I encounter in social networks many pastors and theological educators depending it. In fact, if I am not mistaken, socialism is the air that most evangelical pastors and theological educators breath. At least, I can attest to that as far as my experience when I was still taking my doctoral course is concerned. Most of our readings came from the Marxist camp. I never encounter even just one book from classical liberalism.

And so I decided to return to the basic. I want to understand what socialism is. Of course, I have a bias for the materials that I will be using are written by the classical liberals and economists from the Austrian school.

Based on my initial writing about socialism and reading of Part 2, Section 3 in Ludwig von Mises' book, "Socialism: An Economic and Sociological Analysis," I realized that there are more or less nine or ten forms of socialism. In this article, I want to start with the most popular kind, Marxist socialism. In writing about this topic, I want to share my understanding of three articles, and I just want to start with David Gordon's "Mythologies of Marxism."

David Gordon reviewed G. A. Cohen's "If Youre an Egalitarian, How Come You're So Rich?" In it he shared Cohen's critical assessment of his own belief system. Gordon considered Cohen virtuous in asking tough questions concerning Marxism. Gordon thinks that Cohen's critical assessment of Marxism opens vistas of argument in favor of the free market.

In his review, Gordon identified two areas of discrepancies between Cohen on the one hand and Marx and Rawls on the other. Cohen first dealt with Marx, and started by comparing Marx and Rawls' concepts of egalitarianism and socialism. The two have different basis for their concepts. Rawls based his concepts on morality while Marx on self-interest.

Before presenting Cohen's critical assessment of Marx and his own evaluation, Gordon described first Marx's vision of socialism. It is described as the end product in the evolution of capitalism, a system where the proletariat will ultimately replace entrepreneurs that would end exploitation, and usher into economic abundance. This is Marxian socialism's paradise.

According to Gordon, Cohen identified two errors in this line of thinking. The first one is related to the size of proletariat and the other one is about the unpreparedness of the advocates of socialism after the revolution.

However, despite the honesty of Cohen, Gordon identified that the former failed to ask question related to the basis for the existence of economic abundance in socialism. In effect, Gordon is aking, "How will the socialists account for their paradise of economic abundance?" Gordon believes that socialists cannot provide an answer to this question due to "calculation argument" ably raised by Mises, that the only logical destiny of socialism is one of chaos.

Gordon even placed socialism in a more intricate situation by saying that to claim increased economic productivity by merely replacing business owners with the proletariat has no logical basis. It is simply an assertion without foundation.

After identifying Marx's absurdity, Gordon proceeded to expose the faulty baseline of Rawlsian concept of equality and justice. For Rawls, basic in his idea of equality is the "equality of resources." Existence of inequality is considered illegitimate except on the basis of "difference principle" where inequality is allowed for the purpose of redistributing the excess income for the benefits of the poor.

Furthermore, concerning justice, Rawls regarded it as part of "basic structure" in social institutions. This basic structure serves as the boundary where invidual action caused by self-interest remains just.

Cohen differs on these two points. For him, equality does not need any qualification. He is also not convince with Rawl's concept of justice; it is dualistic to him.

The difference between the two positions is evident in the way they view the role of families in a society. Gordon shared his understanding of Cohen's assesment of Rawls' position: ". . . . family structures have no implications for justice . . . since they are not a concesquence of the formal coercive order." For Cohen, the society cannot maintain the concept of egalitarian justice since families in society are inherently hierarchical.

The final question is about dispensing of resources. For Cohen, though he admits that individual action to give away resources cannot end poverty, the existence of rich socialists is a contradiction. A socialist cannot maintain both: keeping his wealth and believing in egalitarian justice.

Identifying all these absurdities, - size of the proletariat, unpreparedness after the revolution, unaccountability of economic abundance, and maintaining both wealth and egalitarian justice - I now understand why Gordon is confident that Cohen's book works for the advantage of the arguments of the free market.

Thursday, February 27, 2014

In discussing the threat to individual freedom, F. A. Hayek identifies the difference between individualism and socialism. Individualism for Hayek is based on the respect of Christianity for the individual person and the belief that man is free to develop himself and his potentialities. Hayek adds that such philosophy first bloomed during the Renaissance and modeled by Western civilization. As a result of this idea, the direction of social change was towards freedom from feudalism.

Modern improvements such as the flourishing of science, "material comfort," and "self-determination" were the direct results of this philosophy. Because of this, people believed that they can choose their destiny, a belief that they can do anything for the betterment of their conditions. Unfortunately, the succeeding changes shifted into the idea that in order to make human progress faster, the "spontaneous forces" in a free society must be replaced by a collective and "planned" direction. That was the sign of departure from liberalism and the triumph of socialism (either in the forms of "planning" or "organizing"), which was perfected in Germany.

Prior to the widespread influence of Nazism, Germans were already attacking liberalism, democracy, capitalism, and individualism. Add to this the fact that before the rise of Hitler into power, German and Italian socialists were using a strategy that both the fascists and the Nazis effectively used later. This strategy focused on the formation of a political party that covers the life of an individual "from the cradle to the grave." Such party included activities like the gathering of young children, forming them into political organizations, sponsoring games and sports, initiating distinctive way of greetings, and other activities, which aimed to guide the mind of the young, and protect them from other perspective. Associated with it was a close supervision of the private life of an individual. This served as the model for a totalitarian party. This is the reason why Hayek said that it was people of good intentions that paved the way for Hitler. Liberalism was dead when Hitler rose into power and it was socialism who killed it.

For those who witnessed first-hand the transition from socialism to fascism, the connection between the two was obvious. However, for those in democractic countries, they still believe the illusion that socialism and democracy can be combined. Hayek described this illusion:

". . . . but in the democracies the majority of people still believe that socialism and freedom can be combined. They do not realize that democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something utterly different – the very destruction of freedom itself."

Seeing the signs during his time both in the US and the UK, Hayek was alarmed. Writers under the influence of conservative socialism prepared the society for the arrival of National Socialism. Hayek believed that conservative socialism was the the very atmosphere of his time.

Personal Response

I appreciate Hayek's recognition of the role Christianity played in the development of individualism. For him, there is only one form of individualism that started from Christianity and then prospered in the Renaissance. I disagree with this. The kind of individualism that the Renaissance espoused was rooted in the old Protestantism initiated by Erasmus. However, there was also an emphasis on the significance of an individual in the new Protestantism advocated by Luther, Zwingli, and Calvin. The major difference is that central to Renaissance individualism is an idea of emancipation from God and revelation, which the Reformation individualism affirms.

Moreover, I also appreciate F. A. Hayek's description of conservative socialism. Reading his description of his time, led me to think about its applicability for our time. Is conservative socialism no longer the political trend in our time? If it is not, then what is? If it is, understanding the message of F. A. Hayek in "The Road to Serfdom" is critical in determining the future of our time. It's either freedom or serfdom, and that depends on our view socialism, and our response.

Many socialists uphold the illusion that abusive power can be eliminated once the powers of the individuals can be transfered to the "society." They failed to realize that by concentrating power into the hands of the few, they not only transformed its nature, but created a different kind.

It is wrong therefore to think that the power of central planners is less than the collective power of those in the private sector. In a competitive society, no one can possess the power that a socialist planner has. To decentralize power is to reduce it, and this only happens in a competitive society to avoid abuse of one man over another. Who can say that the power of a corporate employer is far lesser from the power of bureaucrat?, asks Hayek. In fact, an unskilled worker in the US has more freedom than an employer in Germany or an engineer and manager in Russia. If he wants to change his job, his residence, his belief, and use his free time in whatever ends he may choose, he has nothing to fear about any form of threat.

Hayek laments, "Our generation has forgotten that the system of private property is the most important guarantee of freedom." This is because the management of the means of of production is divided among many people acting separately. Once the means of production is placed on the hand of a single individual, anyone who has such power possesses total control over the lives of the people. This kind of centralization of power is very alarming. Notice how Hayek describes the nature of such power:

"In the hands of private individuals, what is called economic power can be an instrument of coercion, but it is never control over the whole life of a person. But when economic power is centralized as an instrument of political power it creates a degree of dependence scarcely distinguishable from slavery. It has been well said that, in a country where the sole employer is the state, opposition means death by slow starvation."

Serfs in their own country. I could not remember the number of times I've heard this statement. This is how some people describe the Filipinos, and others would even imply that Philippines is a nation of serfs. And still others would connect the OFW phenomenon to a new Filipino version of serfdom.

In my journey to understand Philippine economy and politics, I revisit a book, which many libertarian intellectuals consider very important. F. A. Hayek, a classical liberal economist and philosopher wrote this book in 1945. Its title is "The Road to Serfdom."

F. A. Hayek shared his observation about features that prepared the way for the rise of fascism in Germany. For him, these features can also be found both in the UK and the US. However, many are confident that fascism's features are too ugly to be repeated in both countries. Such confidence was also present in Germany prior to the rise of fascism, but it did not prevent Germany to fall under its spell.

Two prominent examples of common features evident in fascist Germany that are also prevalent in both the UK and the US are increasing power of the state and the prevalence of central planning. The danger is that both Britons and Americans fail to understand that it was primarily well-intentioned people who laid down the groundwork for the emergence of fascist Germany. Like Mises, Hayek echoed that it was rarely grasped that the widespread influence of both fascism and Marxism was not an act of opposition against socialism, but a logical consequence of it. In fact, notorious fascist and Marxist leaders started as socialists.

In many democratic countries today, intellectuals who hate Nazism are actually working for a goal whose application is similar to the ideology that they abhor. We can see the seeds of socialism in economic developmental projects through the replacement of the competitive system with governmental planning.

After reading the first two pages, I paused for a while and asked myself, "Is this situation also true in the Philippines? In what way can we see at present this expanding power of the government and the centralization of economic planning? I hope that in the coming days, the answer to this question will be made clear.

"For the love of money is the root of all evil,.... Of all the evils before mentioned, and of others; not money itself, as silver and gold, which are God's creatures, and his gifts, and may be used to, and answer many good purposes; but the love of it, and not any love of it; for there may be a lawful love of it, and desire after it, so far as it is requisite to the necessaries of life, to answer the calls of Providence, the duties we owe to God and men, to serve the interest of Christ, and do good to fellow creatures and fellow Christians: but it is an immoderate insatiable desire after it, and an inordinate love of it, which is here meant, such as is properly idolatry: as when a man loves it, not only besides, but above God; serves it as if it was God, and places his trust and confidence in it, independent of God, and his providence; such love of it is the source and spring of all iniquity, as above; it was the sin of Judas, and the root of all his iniquity. The phrase is Jewish. So idolatry is said to be , 'the root of all iniquities.' " - Gill's Exposition of the Entire Bible

My Personal Response to an Inquiry in FacebookThe Inquiry:How do you balance wealth creation with this wisdom?

Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs. But you, man of God, flee from all this, and pursue righteousness, godliness, faith, love, endurance and gentleness. (1 Timothy 6:9-11 NIV)My Response:

I think the central idea of the passage in 1 Timothy 6, which starts from verse 3 is the wrong notion about godliness. These people were using even the teaching ministry in the church to achieve their end, financial gain. They didn't see godliness as a worthy goal in itself, but only a means to acquire wealth. The biblical idea of wealth is different; it is a result of covenantal faithfulness. In this context, godliness is not a means, but an end, even a higher and greater end than wealth itself. At this point, I see two relationships between godliness and wealth. Since wealth is an outcome of covenantal faithfulness, we can deduce two things: first, godliness has an independent existence even apart from wealth, and; second, that remaining faithful to divine covenant results to wealth increase.

Returning to 1 Timothy 6:10, Paul tells us that the real reason these teachers had a distorted concept of godliness was due to the love of money, philarguria in Greek and better translated as avarice, greed or covetousness. The text therefore does not condemn money per se or the legitimate means to acquire wealth, but the excessive desire to accumulate money even resorting to illegitimate means.

"We see the apparent benefit of having our own wages increased. But we don’t consider the nameless victims of the minimum wage hike who will lose their jobs because the government has priced them out of the labor market."

"This is a case of medicine causing a disease that politicians then seek to cure with more of the same medicine. A better course of treatment would be to fire the doctors."

http://www.fee.org/the_freeman/detail/minimum-wage-maximum-folly

"Their statement went on to say, 'We believe that a modest increase in the minimum wage would improve the well-being of low-wage workers and would not have the adverse effects that critics have claimed.' Moreover they as­serted, 'The minimum wage is also an important tool in fighting poverty.' These and other assertions amount to what might be seen as examples of economic malpractice."

Wednesday, February 19, 2014

Though speaking about atomically precise manufacturing (APM) and nanotechonology, I find the wise words of K. Eric Drexler applicable beyond conversation about future trends in technology:

"There’s something that I feel I must say to some of my readers, and I hope that they will understand a somewhat counter-intuitive message and take it to heart. If you find these ideas about prospective technologies compelling, convincing, and exciting— if you imagine vistas far beyond any I’ve outlined, or see solutions to urgent global problems and feel the urge to share the full measure of your excitement— then please lie down until the urge passes. In the world as it is, this kind of excitement triggers a negative response, and for reasons that usually make sense; almost all grand ideas proclaimed by excited proponents turn out to be wrong and are generally discounted without consideration. If you want to make a positive difference, please help to keep fundamentals first, help to correct mistaken ideas, and join the conversation without shouting." - K. Eric Drexler, Author of Engines of Creation (1986).

Under the "Perspective" section, The Freeman claims that there is an ongoing revolution that is quiet and invisible to many (January/February 2014). This revolution is happening in the midst of "The Great Stagnation" as described by intellectuals and economists.

This revolution has something to do with "automation of everything" and "nanomanufacturing." Examples of this are a robot cutting your hair and printing a pencil. The proper response to this revolution should be one of creative adaptability, a quality most important for entrepreneurs. Those who possess such quality can make use of the opportunities offered by such changes for their own advantage. FEE cites John Chisholm confirming this insight:

"'Choose any product or service in an area you are passionate and knowledgeable about. The area may be aerospace, boats, cars, cooking, education, electronics, fashion, fiction, films, fitness, gadgets, gardening, health, history, math, merchandising, music, politics, scuba, space, sports, statistics, travel, woodworking, you name it. Now think of limitations of the product or service you selected.'"

FEE explains the importance of such insight:

"If you find those limitations, then you can exploit them by finding ways to make life better for people by bridging the gaps or solving the problems those limitations present."

After reading the above two quotations, my mind directed me to think about my chosen academic field, theological education. One of its limitations is the scarcity of literature related to economics. Bridging the gap from theology to economics makes a theological educator marketable.

This insight is also helpful for those who see automation and nanomanufacturing as economic threats. FEE argues that instead of seeing them as "job killers," they should be seen as "productivity enhancers."

And then FEE enumerates three trends that will characterize the next twenty years:

"Automation is going to displace a lot of skilled and unskilled labor—particularly as minimum wages and other bad laws raise labor costs that make automation more attractive."

"Nanotechnology is going to mean that the production processes we’re used to are going to change. Entire sections of a manufacturing ecosystem (logistics, warehousing, assembly) may disappear thanks to new nanoscale manufacturing techniques that obviate the need for many discrete-but-interconnected parts created in different places."

"Connectivity is going to mean that some things can be manufactured—right there—in your home or place of business. Or that new assembly and logistics systems will emerge over the old ones."

FEE describes these trends as "creative destruction" that will result to "radical abundance," which means that "Better, faster, and cheaper is going to be the new normal."

However, "the political class" is the primary obstacle for the realization of this vision particularly in sectors of economy such as "healthcare, education, and energy." This class does it through economic regulations. Moreover, it is part of its nature to feed on the productive sector of the economy. No wonder, products and services in in these three sectors of economy "are getting worse, slower, and more expensive." The only hope is that "sharp, savvy entrepreneurs will find cracks and fissures in these State-heavy sectors and restore the benefits of creative destruction."

Guide Questions:

1. What does the writer mean by The Great Stagnation?

2. What is this quiet and invisible revolution all about?

3. Can you give examples of such quiet and invisible revolution?

4. What is Ricardo's law?

5. What limitation can you find from your favorite product or service?

6. What should be our attitude towards automation and nanotechonology? What should be our proper response to this revolution?

8. What is the primary obstacle for the realization or delay of this vision? Why?

9. In which sector of the economy this vision will be more difficult to realize? Why products and services in these sectors so expensive?

Monday, February 17, 2014

Reading the "Introduction" of the condensed version of "The Road to Serfdom," I stumbled with a conversation between an aspiring politician and an economist:

Politician (Fisher): I share all your worries and concerns as expressed in "The Road to Serfdom" and I’m going to go into politics and put it all right.

Economist (Hayek): No you’re not! Society’s course will be changed only by a change in ideas. First you must reach the intellectuals, the teachers and writers, with reasoned argument. It will be their influence on society which will prevail, and the politicians will follow. . . . Keep out of politics and make an intellectual case . . . if you can stick to these rules you keep out of a lot of trouble and apparently do a lot of good.

I find Hayek's advice to Fisher repeatedly in reading Mises' "Economic Policy" and "Planned Chaos." "The Road to Serfdom" is the first book of Hayek that I read. Ron Paul reminds me of the book while re-reading his "Mises and Austrian Economics: A Personal View."

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"This book is a warning cry in a time of hesitation. It says to us: Stop, look and listen. Its logic is incontestable, and it should have the widest possible audience." -John Chamberlain

"In The Road to Serfdom, Friedrich A. Hayek has written one of the most important books of our generation. It restates for our time the issue between liberty and authority. It is an arresting call to all well-intentioned planners and socialists, to all those who are sincere democrats and liberals at heart, to stop, look and listen." - Henry Hazlitt, The New York Times

"Professor Hayek, with great power and rigour of reasoning, sounds a grim warning to Americans and Britons who look to the government to provide the way out of all our economic difficulties. He demonstrates that fascism and what the Germans correctly call National Socialism are the inevitable results of the increasing growth of state control and state power, of national ‘planning’ and of socialism." - Preface

"Hayek employed economics to investigate the mind of man, using the knowledge he had gained to unveil the totalitarian nature of socialism and to explain how it inevitably leads to ‘serfdom’. His greatest contribution lay in the discovery of a simple yet profound truth: man does not and cannot know everything, and when he acts as if he does, disaster follows. He recognised that socialism, the collectivist state, and planned economies represent the ultimate form of hubris, for those who plan them attempt – with insufficient knowledge – to redesign the nature of man. In so doing, would-be planners arrogantly ignore traditions that embody the wisdom of generations; impetuously disregard customs whose purpose they do not understand; and blithely confuse the law written on the hearts of men – which they cannot change – with administrative rules that they can alter at whim. For Hayek, such presumption was not only a ‘fatal conceit’, but also ‘the road to serfdom’. . . . It is no exaggeration to say that 'The Road to Serfdom' simultaneously prevented the emergence of full-blown socialism in Western Europe and the United States and planted seeds of freedom in the Soviet Union that would finally bear fruit nearly 45 years later. Socialist catchphrases such as ‘collectivism’ were stricken from the mainstream political debate and even academic socialists were forced to retreat from their defence of overt social planning." - Edwin J. Feulner Jr. 1999

Saturday, February 15, 2014

In a pamphlet written in 1981, "Gold, Peace, and Prosperity: The Birth of a New Currency," there is a section where Ron Paul gave an overview of how money was ruined. For us to grasp how the global monetary system reaches the existing critical stage, we have to take a look at four significant events in monetary history:

Gold Coin Standard

Gold Bullion Standard

Gold Exchange Standard

Managed Fiat Currency Standard

The deterioration of the monetary system has undergone a long and slow process, which resulted from a series of decisions of the US Congress. The Gold Coin Standard was the monetary system prior to the Gold Reserve Act of 1934, the law that served as the basis for the Gold Bullion Standard.

Twenty-one years earlier, the way had been paved for the deterioration of the monetary system caused by the Federal Reserve Act of 1913. For Ron Paul, the establishment of the Federal Reserve is just an implementation of an advice mentioned by Karl Marx on 1848 in Communist Manifesto where the latter talks about the "Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly." It shows that there is a 65 year gap from the time Marx shared such idea until the approval of the Federal Reserve Act of 1913.

The formation of the Federal Reserve was followed by massive inflation in the 1920s with the "economic interventionism" of both Republican and Democratic administrations that culminated in the Great Depression of 1930s.

Gold Coin Standard

The Gold Coin Standard protects the people from the attempts of the government "to inflate, control the economy, run up deficits, and fight senseless wars, . . . ." But for central planners, the Gold Coin Standard was a great barrier that must be removed. Such desire was fulfilled through the "Gold Reserve Act of 1934, which outlawed private ownership of gold, prohibited the use of 'gold clause' contracts, and abolished the gold coin standard. This "law created the gold bullion standard," which lasted "for only ten years."

Ron Paul mentioned that the Federal Reserve was established under the influence of "American Bankers Association and the nation’s biggest bankers, such as J. P. Morgan and Paul Warburg." The goal was to protect their industry "against bank failures and to provide a more 'elastic' currency," where bankers and big corporations would greatly benefit.

Ron Paul quoted the words of John Maynard Keynes in 1919 as an appropriate description of what happened in the formation of the Federal Reserve:

“There is no subtler nor surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Gold Bullion Standard

The establishment of the Gold Bullion Standard opened the way to sow seeds destructive both to US and world economy. It prohibits private ownership of gold and considered the making of "goldclause contracts" illegal. For Ron Paul, this did not only violate American's "constitutional rights," but also removed the protection of the people "from spendthrift and untrustworthy government."

After WW2, gold had kept entering the US until 1948. This "massive accumulation of gold in the U.S. Treasury" gave an opportunity to return to "full gold coin standard." However, leaders that time ignored the legislation introduced by Congressman Howard Buffett of Nebraska, and instead, they went to "Bretton Woods, drew up an agreement with bankers from other nations, and set America on a disaster course."

Gold Exchange Standard

The "monetary reforms" created at Bretton Woods, New Hampshire on July 1944 provided the basis for 44 countries to form the WB and the IMF, which started operation in 1946 under the "new" Gold Exchange Standard, that gave permission to treat USD "as good as gold" and be considered as the "international reserve currency." The goals of this new monetary system is “to maintain exchange stability and stimulate world economic activity,” in which in the eyes of Ron Paul is "nothing more than an international Federal Reserve System." This agreement lasted for 27 years.

Managed Fiat Currency Standard

The Bretton Woods agreement died at the age of 27 on August 15, 1971 when President Nixon closed the "gold window," and refused to redeem the USD overseas with gold. A great door has been opened for massive inflation that made the bureaucrats, politicians, international bankers, TNCs, and some labor leaders to celebrate. Managed Fiat Currency Standard was born.

As a result of this new monetary system, the US found a well to provide fund for the "Vietnam War and the Great Society, as well as massive business malinvestments." With the end of Bretton Woods agreement, the USD also died on the same date in the sense that its connection to gold has been removed.

Personal Remarks

Remember that Ron Paul wrote all of this 33 years ago. Many things have changed since then. Personally, I only have a superficial knowledge about the four key important events in monetary history. Among many information that I encountered so far, two subjects caught my attention - exportation of inflation and transfer of wealth.

Ron Paul mentioned that keeping bigger portion of printed USD outside of US shores would give an appearance that the American economy was not really in bad shape as analyzed by the critics of the Fed. The danger is that once countries who hold the depreciated USD began to feel the harm of the excessive quantity of USD to their economies, and will decide to return them to their source. That's the time that the American people will realize the extent of economic devastation caused by massive inflation coming from the Fed.

Concerning wealth transfer, I just want to mention two ideas that I consider popular these days. The first one is taken from the Bible where many Christians believe that a time will come that the wealth of the wicked will be transfered into the hands of the righteous. I just could not understand how they seem to believe that the existing global economic crisis would usher into the fulfillment of their favorite biblical passages. The second idea is inspired by information explosion. It is believed that the advent of the Internet opened doors of opportunities for entrepreneurs. The successful will experience this transfer of wealth. Ron Paul was talking about a different kind of wealth transfer. He describes the kind of wealth transfer that is actually happening in the real world caused by the existing monetary system. This is a transfer of wealth "from the less well-off to the well-to-do."

In concluding this article, a question comes to my mind. Giving a grade to Federal Reserve, IMF, and WB on the basis of their performance, we could say that after more than a century (in the case of the Fed) and 68 years ( in the case of IMF and WB) in existence, it seems that these financial institutions failed to achieve their goals. Are the stability and stimulation of world economy their real goals? Or are these goals just subtle devices only good in paper to convince the public but hiding the real agenda behind "noble intentions?"

Friday, February 7, 2014

Contrary to Marxist reading that capitalism widens the gap between the "proletariat" and the 'bourgeois," Mises sees it as a way to "deproletarianizes the 'common man' and elevates him to the rank of a 'bourgeois.'" (Ludwig von Mises, "The Anti-Capitalistic Mentality," 1956, p. 1) Capitalism does this through its distinguishing mark, "mass production of goods" for the consumption of the masses, which results to the improvement of the standard of living of many. If this improvement is not happening, its either Mises' analysis is wrong or the "capitalism" that we know today is not the kind of capitalism that Mises describes.

Gary North quoted Murray Rothbard saying, “'The fate of Western civilization is going to be settled when we find out whether their Jews win the argument or our Jews do.” Rothbard was referring to influential Jewish economists coming from both the left and the right. From the left, we have Paul Samuelson and Karl Marx. From the right, we have Ludwig von Mises, Milton Friedman, and Israel Kirzner. The Jewish camp that will win the economic argument will determine the destiny of Western civilization. North accepts that Rothbard's "analysis is basically correct" in relation to existing "social and economic policies."

If Mises is wrong, all the economists that follow the Austrian school of thought are mistaken. We therefore need to listen to neo-Marxists economists. On the basis of Mises' analysis, the existing economic system of the US is not capitalism, but a brand of socialism, the statist and interventionist kind. For Marx and his followers, capitalism breeds injustice and economic inequality and the primary cause of economic poverty of the majority. The solution therefore is for the state to intervene in economic affairs to redistribute wealth through welfare programs.

On the other hand, if Marxian analysis is wrong, what's happening is that the crimes of statist interventionism are done in the name of capitalism. Capitalism is used as a camouflage, a smoke screen to cover the statist's real color. The sad thing is that the prevailing solution to these statist's misdeeds is more government intervention that will get the situation worse and worse. This would mean that increasing quantity of resources will be taken from the productive sector of the economy to finance bigger government bureaucracy. The situation seems hopeless for almost everyone believes Marxian analysis. Mises is virtually unknown. Mainstream media and education are successful in making the majority economically blind.